Management Notebook

MAKE IT BIG IN THE SMALL CLUB MARKET

You don't have to be big to be successful.

Diana Hamilton is motivated. When she purchased Quest Fitness of Lutherville, MD two years ago, her goal was to double her membership in three to five years. She's well on her way to doing that. The 26,000-square-foot club has 1,900 members. Net membership increased 8.9 percent last year, an impressive number considering Hamilton is in a competitive market with seven other clubs including Bally Total Fitness, Brick Bodies, Merit and Gold's Gym.

Matthew Wagner, owner of the 10,000-square-foot Nautilus Health Center in Huntsville, TX, a small town near Houston, has few competitors. The town of 25,000 people is home to a small college and a state prison. His club's only other competitors are a women's only club and the university's facility. The local hospital has a rehab facility. Wagner pulls many of his 1,200 members from the college and from the prison shift workers.

Julia Wheatley, owner of Women's Fitness Center Inc. in Harrisonburg, VA, is at a crossroads with her 5,250-square-foot club. While her membership, currently at 250 female members, had been increasing steadily for years, recently the numbers have decreased as new clubs move into the area. The increased competition is causing Wheatley to evaluate her club to see how it can retain its membership and get back on the growth track.

The three club owners use some of the same methods to keep their small clubs profitable in the era of big clubs. Here's their advice for small club owners.

Differentiate yourself

When Hamilton developed her marketing plan, she analyzed the area's demographics as well as her competitors' membership in hopes of spotting a void. She was amazed to find that in a town filled with college students and shift workers, no 24-hour clubs existed. So, she opened the club 24 hours to provide the flexibility required by that audience.

Wagner also recognized that he operates in a college and shift worker-based town. He accommodates this market by keeping his club open from 4 a.m. to midnight each day.

Wheatley found her niche in the women-only market.

“Many of the women — because of low self esteem or poor body image — they wouldn't go to a co-ed club,” Wheatley says. “We provide another avenue for them.”

She also differentiates her club by offering a service that other area clubs don't — an electronic system attached to every piece of equipment that monitors each member's activity. The system replaces traditional exercise cards.

“Typically, this is offered in larger clubs, but I went out on a limb and invested in that,” Wheatley says. “We've had it for five years. It's helped us carve a niche. We are the only club in a wide area to have this system.”

Know who you are

Once you've determined your members, make sure the staff knows your market and what kind of club you are.

“We decided we were going to be the most affordable club with a comfortable atmosphere,” Hamilton says. For that reason, the club doesn't offer a lot of amenities.

For Wheatley, knowing her market meant knowing that the club's old logo of a woman with spiky hair was dated and intimidating to her member base of 35-year-old to 65-year-old women. She quickly changed the logo to fit her members better. In addition, she changed the exercise equipment in the club bringing in treadmills, recumbent bikes and ellipticals that were more comfortable for the women, most of whom were new to exercising.

Aggressively market to your target audience

No clubs were aggressively pursuing the college market in Hamilton's town, so she created an ad that ran weekly in the college paper and offered the best student membership fee in town.

“We have students swarming in here as a result of that,” Hamilton says.

Member testimonial ads paid off for Wheatley's female-only club. Featuring the personal story of one member per week, the ads detailed that member's journey to fitness and revealed to potential members that current members were just like them.

“People have preconceived notions about health clubs,” Wheatley says. “They think everyone there is younger than them and fitter than them. You have to let them know that clubs are comprised of people like them.”

Know their names

Smaller membership numbers offer small clubs a greater possibility of getting to know the names and personalities of members. A club such as Wheatley's with 250 members can be a tight-knit community. Not only does her staff know each member but club members also know each other to the point they often ask about absent members.

Even in Wagner's 1,200-member club, he says that knowing members' names is important because it creates a more comfortable atmosphere.

“A small club has to be able to provide a place where members belong, not just join,” Wagner says. “So they are not a number; they are a name.”

Go the extra mile

Staff at a small club often can do little things that make club members feel special. For instance, Wagner once surprised a hurried visitor who planned to go to the movies that evening by checking on movie times while the man worked out. The man was amazed at Wagner's thoughtfulness. Later, he joined the club and has brought several friends in to become members.

At Wheatley's club, the staff calls or mails a postcard to any member that “disappears” for 10 days or longer to see if the member is having an issue with which the staff can help.

“We want them to know that we care, and we do want them to come in. Once people get inactive, especially women, they just disappear,” Wheatley says.

Offer amenities where you can

Most small clubs are not only small in member size but in space, which limits the amenities the clubs can offer. Hamilton's club doesn't offer towel service, but she does offer massage service (for an extra fee) and she leases space to a sports medicine therapist.

Ensure a comfortable atmosphere

If you know your members, you know what type of atmosphere they want at the club. Hamilton says her members want a non-intimidating atmosphere. To ensure that, the club has a code that prohibits thongs, ripped tanks, chalk and loud groaning sounds.

Hire peppy people

While the proper credentials are essential for employees at a club, a positive, happy attitude is also important. Hamilton doesn't hire anyone who doesn't have a happy, friendly and easy-to-work with attitude.

Keep your staff happy

Larger clubs sometimes can pay more than smaller clubs, but that doesn't mean small clubs can't keep staff on board. Wagner acknowledges that he can't pay a premium for his staff, but he tries to make it up in perks and with commissions. He may hand out a certificate of appreciation, spot bonuses or take staff out for dinner.

“I'm trying to make it an atmosphere where they are proud of what they do,” Wagner says. “If they are proud, it is easier to get them to stay.”

Hamilton says she's competitive with staff salary and compensation.

“I would rather pay five people really well than pay 10 people so-so because then those five people are more loyal and dedicated,” says Hamilton.

She ads that she doesn't have problems retaining employees. “Everyone that works with me knows that I'm committed to them,” Hamilton says. “Whatever their goals are, I'll do what I can to help them be successful. That's the biggest thing that keeps them with me.”

For Wheatley's small staff, many of which are graduate students, the opportunity to perform a myriad of functions is a draw. The variety in their day — working at the front desk, making follow-up calls, working the floor, and earning commissions on membership sales and renewals — makes their jobs interesting and provides for a more impressive resume when they graduate.

Change little things

A small change in the look of a club, the equipment or amenities shows that a staff is committed to improving the club, says Wagner. He makes sure things constantly change at his club. While he can't afford to change out a whole line of equipment at one time, Wagner can replace the line a little at a time.

“You don't want them to see you driving around in a Beemer but the showers aren't working at the club,” Wagner says.

Charge what you have to charge

Small clubs don't have to charge more than larger clubs to make a profit. They also can't necessarily charge lower fees. They just need to charge what they need to pay off their expenses, Wagner says.

“We charge what we have to charge,” says Wagner. “I don't base it on anyone else.”

Wheatley says that she doesn't claim to be the least expensive club in town.

Instead of shopping clubs over the phone, Wheatley encourages potential members to visit the club. There's no sense in joining a cheaper club if a member doesn't feel comfortable enough to go to it, she says.

Look like a Big Boy

The problem with many small clubs is that they look like small clubs, which often doesn't inspire confidence in prospective members. Hamilton invested in a lot of equipment — seven lines of strength equipment, 60 pieces of cardio equipment — partly in an effort to look like a larger club. The staff keeps the equipment clean, in working order and updated. The club also has upscale decorations with a pylon sign out front and a canopy over the front door.

“Usually, mom and pop clubs don't look like this,” Hamilton says. “We have the feel of a larger chain.”

Think like a Big Boy

What often limits small clubs is small thinking. Not every small club wants to become a big club, but all clubs want to fulfill a mission of making people healthier while turning enough of a profit to stay in business.

“Even though you are a small club, in your mind you have to see yourself as a big club,” Hamilton says. “You have to see yourself as them. Think like them. Look like them.”